Blue Owl Is Having a Hoot — Record Money From Big Investors, 9.3% Returns
Blue Owl Capital’s (NYSE:OWL) credit platform posted record institutional fundraising in the third quarter as the alternative asset manager reported solid direct lending returns, low realized losses and continued demand for private credit strategies.
Year-to-date fundraising for the credit platform had already reached roughly its full-year 2024 total and was 70% above full-year 2023, co-CEO Mark Lipschultz said during the company’s third-quarter earnings call Thursday.
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Blue Owl reported 9.3% gross returns for direct lending and 10.3% for alternative credit over the past 12 months, outperforming relevant public credit benchmarks over the same period.
"Portfolio health remains robust with no meaningful changes to our direct lending watch list, portfolio growth trends, or our realized loss rate," Lipschultz said.
The direct lending portfolio’s annualized realized loss rate stood at just 12 basis points, while the technology lending book recorded a net gain, according to management.
Private Credit Fundraising Gains Momentum
Blue Owl raised $12.6 billion in total capital during the third quarter, bringing its 12-month fundraising total to $49 billion. The company’s assets under management rose 12% year-over-year to $330 billion.
"About 45% of the capital raised over the past 12 months went to the credit platform," CFO Alan Kirschenbaum said. During the third quarter, Blue Owl raised $5.6 billion for credit strategies, including $1.8 billion for direct lending and $1.1 billion for alternative credit.
Lipschultz pointed to the firm’s underwriting discipline as a key part of its approach in uncertain markets.
"Most importantly, we’ve maintained our investment discipline and rigorous underwriting standards across a widely fluctuating set of rate and economic backdrops," he said, adding that the firm seeks markets offering attractive returns relative to risk.
Market Volatility Creates Lending Opportunities
Management said changes in interest-rate expectations have created opportunities for direct lenders. Blue Owl’s direct lending portfolio consists of floating-rate loans, allowing existing loans to reprice as benchmark rates move.
"In direct lending, our loan portfolio is floating rate," Lipschultz said, explaining that higher base rates and wider spreads can benefit both new investments and existing holdings.
"We are seeing a lot we like as far as investment opportunities in the current market," he said.
Blue Owl also said it has been able to pursue opportunities in alternative credit created by market volatility and limited liquidity. Revenue and EBITDA growth across its portfolio remained in the mid- to high-single digits, management said.
Blue Owl Looks Toward Further Growth
Beyond credit, Blue Owl highlighted opportunities in digital infrastructure and real estate credit, including demand tied to data centers and artificial intelligence infrastructure.
The firm said it had more than $140 billion in near-term deployment opportunities across net lease and digital infrastructure. In real estate credit, management said it had deployed capital at higher rates and wider spreads amid a more volatile interest-rate environment.
Executives also said they expect management fee growth to accelerate in 2027 as capital raised in recent periods is deployed and begins generating fees.
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